salesforce.com, inc. (NYSE: CRM) stock lost over 3.4% in the pre market session on August 30th, 2018 after the company posted better than expected results for the second quarter 2018. The company projects third quarter profit below analysts’ estimates, as the cloud-software maker invests heavily to boost sales and fend off rising competition. Net income for the second quarter rose to $299 million, in the second quarter ended July 31 from $46 million, a year earlier. CRM has been reaping the benefits of a trend of companies increasingly turning to cloud-based services, but faces stiff competition from Microsoft’s Dynamics 365, which competes with Salesforce’s flagship Sales Cloud offering, and from Oracle.
CRM in the second quarter of FY 18 has reported the adjusted earnings per share of 71 cents, beating the analysts’ estimates for the adjusted earnings per share of 47 cents. The company had reported the adjusted revenue growth of 27 percent to $3.28 billion in the second quarter of FY 18, beating the analysts’ estimates for revenue of $3.23 billion.
Moreover, in the second quarter 2018, Sales Cloud grew 13% surpassing $1 billion in quarterly revenue for the first time. The company in the second quarter, expanded the relationship with 100-year old CPG company that’s undergoing a multiyear digital transformation. Service Cloud grew 27% as more and more companies include National Grid and Southwest Airlines turn to Salesforce to power their next generation customer engagement. Marketing and Commerce Cloud grew 37%. In the second quarter, the company expanded the Kimberly-Clark whose products are used every day by one quarter of the world’s population. CRM also deepened the relationship with Hulu, which is using Marketing Cloud, Service Cloud and Einstein to personalize the viewer experience for more than 20 million subscribers. Finally, the Salesforce platform grew 32% in Q2, 54% including MuleSoft. In the international business, CRM continued to deliver strong revenue growth across key regions, 32% EMEA, 28% APAC all in constant currency.
The company expects third-quarter profit to be in the range of 49 cents and 50 cents per share, and revenue is expected to be in the range of $3.36 billion to $3.37 billion. Analysts on average were expecting a profit of 54 cents and revenue of $3.35 billion, according to Thomson Reuters
The company has raised full year revenue guidance by $50 million to $13.175 billion at the high end of the range for 25% growth this year